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August 30, 2009

China Unicom H1 revenue declines, reaches agreement to sell iPhones

Profit falls as a result of corporate restructuring

By CBR Staff Writer

China Unicom has reported revenue of RMB76.32 billion in the first half of 2009. Service revenue amounted to RMB74.51 billion, representing a decline of 4.3% compared to the same period in 2008. Service revenue of the GSM business reached RMB34.19 billion, representing an increase of 5.7% over the same period in 2008.

Service revenue of the fixed-line business reached RMB40.19 billion, representing a decline of 11.3% over the same period a year ago. Of the revenue from the fixed-line business, revenue from the fixed-line broadband service was RMB11.73 billion, representing an increase of 10.3% over the same period of last year.

For the first half of the year, the company reported profit of RMB6.62 billion, representing a decline of 42.1% due to the impact of corporate restructuring. Basic earnings per share was RMB0.28.

On August 28, the company and Apple reached a three-year agreement for the company to sell iPhones in China. The initial launch is expected to be in the fourth quarter of 2009. Details of the deal were not revealed.

Unlike other operators, China Unicom will not share revenue with Apple. The company will purchase iphones from Apple on a wholesale basis, which will be resold to consumers, reported The Wall Street Journal. The iPhone deal comes alongside China Unicom’s rollout of a new 3G network.

The company said that since obtaining the 3G (WCDMA) operating license on January 7, it has focused on developing 3G network construction and preparing for business operation. With the same amount of capital expenditure on the 3G network construction as planned for the year, the number of cities covered by 3G network will be expanded from the original 284 cities planned earlier this year to 335 cities.

The company said that in the second half of the year, it will implement various measures to maintain growth of its mobile business and mitigate the decline of its traditional fixed-line business. The company also emphasises on 3G business and will step up its efforts on network construction and optimisation, and improvement on sales and marketing and handsets strategies.

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The company will continue to push forward the 3G pre-commercial trial and aims for the launch of 3G business within the year.

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